Search
Open Account
Apply For Loan
Locations & ATMs
989.777.3620
Contact Us
  • Save & Spend
    • Savings Accounts
    • Checking & Debit Cards
    • Youth and Teen Accounts
    • Open Account
  • Borrow
    • Auto Loans
    • Quick Cash Loan
    • Mortgages
    • Home Equity Loans & Lines of Credit
    • Personal Loans
    • Recreational Loans
    • Personal Line of Credit
    • Student Loans
    • Insurance
    • Credit Cards
    • Open Account
  • Invest
    • Certificates (CDs)
    • Personal Investment Portal
      • Cryptocurrency
      • Securities
    • Retirement & IRAs
    • Wealth Management
    • Estate Planning
    • Insurance
    • Open Account
  • Resources
    • Digital Banking
    • CashBack+
    • Schedule an Appointment
    • Financial Blog
    • Educational Resources
    • Fraud Updates
    • Calculators & Coaches
    • For Sale
    • UFirst Foundation
    • Important Links
    • Scholarships
  • Join
    • Why Choose United Financial
    • Membership Benefits
    • Open Account
    • Schedule an Appointment
  • Businesses
    • Business Services
    • Business Accounts
    • Feature Business
  • About
    • Mission & History
    • Newsletter
    • Community Involvement
    • Fundraiser
    • Credit Union Events
      • United Financial Golf Outing
      • United Financial Walleye Race
    • Hometown Hero Program
    • School Branch
    • Careers
    • Contact Us
  • Member Login
  • Apply For Loan
  • Open Account
  • Save & Spend
    • Savings Accounts
    • Checking & Debit Cards
    • Youth and Teen Accounts
    • Open Account
  • Borrow
    • Auto Loans
    • Quick Cash Loan
    • Mortgages
    • Home Equity Loans & Lines of Credit
    • Personal Loans
    • Recreational Loans
    • Personal Line of Credit
    • Student Loans
    • Insurance
    • Credit Cards
    • Open Account
  • Invest
    • Certificates (CDs)
    • Personal Investment Portal
      • Cryptocurrency
      • Securities
    • Retirement & IRAs
    • Wealth Management
    • Estate Planning
    • Insurance
    • Open Account
  • Resources
    • Digital Banking
    • CashBack+
    • Schedule an Appointment
    • Financial Blog
    • Educational Resources
    • Fraud Updates
    • Calculators & Coaches
    • For Sale
    • UFirst Foundation
    • Important Links
    • Scholarships
  • Join
    • Why Choose United Financial
    • Membership Benefits
    • Open Account
    • Schedule an Appointment
  • Businesses
    • Business Services
    • Business Accounts
    • Feature Business
  • About
    • Mission & History
    • Newsletter
    • Community Involvement
    • Fundraiser
    • Credit Union Events
      • United Financial Golf Outing
      • United Financial Walleye Race
    • Hometown Hero Program
    • School Branch
    • Careers
    • Contact Us
  • Member Login
  • Apply For Loan
  • Open Account

Allowances Don’t Teach Kids About Money — You Do

by Marketing | May 15, 2017 | Financial Tip

Many parents tell me they feel guilty about allowances.

They aren’t consistent about when and how they give their kids money. They wonder if allowances should be tied to chores. Even how they dole out money can be a problem. Cash is easiest, but much of what kids want to buy — downloads of a favorite show, a toy on Amazon, a realm in Minecraft — requires plastic.

I’ve used our daughter as a guinea pig to test all kinds of allowance systems and apps, starting when she was just 3.

We started with divided piggy banks that had sections for spending, saving and sharing. (Money Savvy Pig and Moon Jar are two options.) We moved on to apps when more of her purchases moved online. We used iAllowance; other trackers include Bankaroo, PiggyBot and Allowance & Chores Bot.

But then she landed a steady customer for her pet-tending business and at 13 was old enough to have her own bank account. Now she earns and manages her own pocket money. She uses our accounts for iTunes and Amazon purchases, as they require a credit card, but I transfer money from her account to ours once a month to cover them.

Along the way, she learned to make choices, delay gratification and save up for stuff she wanted, including a laptop. I’m not certain, though, that we can credit the allowance.

Research indicates that parents’ behavior — the example they set — and the discussions they have with their kids about money are much more important in shaping their future financial health.

Watching what you do

One 2015 study for the Consumer Financial Protection Bureau, which reviewed research in developmental psychology, education and consumer science, found parents were “critical” in fostering financial well-being in children.

Parents don’t have to be money experts to talk about the importance of delayed gratification or the difference between wants and needs, says report researcher Elizabeth Odders-White, associate finance professor at the University of Wisconsin, Madison.

“You don’t have to sit down and do some crazy complex financial calculations with your kids,” says Odders-White. “You just need to talk about the decisions you’re already making. ‘We need to buy this, we want to buy that.’”

Your behavior counts, too. A recent T. Rowe Price survey found that when parents had at least three types of savings accounts — for example, an emergency fund, a college fund and a retirement account — their kids were:

  • more likely to have savings of their own
  • less likely to spend money as soon as they got it
  • less likely to have lied to their parents about how they spent money

By contrast, parents who had more than $5,000 in credit card debt were more likely to have kids who spent money as soon as they received it. Their kids also were more likely to expect their parents to buy them what they wanted.

“Your behavior is noticed by your kids, and it does rub off,” says Roger Young, senior financial planner for T. Rowe Price (and father of three teenagers).

It’s the conversation, not the cash

Allowances, by contrast, seem to be a much less effective tool for teaching positive financial behaviors. Unconditional allowances — those not tied to chores — may be the worst.

Chores certainly contribute to children’s character development and future career success, according to various studies by Harvard University and the University of Minnesota. Some child behavior experts say chores should be unpaid to teach the importance of contributing to the family.

But financial literacy expert Lewis Mandell has found in his own studies and reviews of others’ research that kids who receive no-strings allowances knew much less than others about saving, spending and credit, and they had a worse work ethic.

The value in an allowance comes from the interaction between parent and child about financial matters, Mandell says. When paying for chores, the parent has to monitor whether the work gets done, and the payment is a type of feedback. When there’s no allowance, the child has to initiate and justify requests for cash, which leads to a money discussion.

Without those interactions, the allowance becomes an entitlement that implies money doesn’t have to be earned or managed, Mandell says.

So if you give your kids an allowance, explain the rules (such as “when it’s gone, it’s gone”) and ask what they’re learning (“Are you happy with what you bought?” or “What do you want to save up to buy next?”).

If you decide against an allowance — or forget to hand it out half the time — you should still talk about saving, making choices, planning for the future.

And don’t stop. Even into young adulthood, your kids pay attention, researcher Odders-White says.

“They’re making some of their first independent decisions, but they still look to their parents for advice,” she says.

Liz Weston is a certified financial planner and columnist at NerdWallet, a personal finance website, and author of “Your Credit Score.” Email: lweston@nerdwallet.com. Twitter: @lizweston.

This article was written by NerdWallet and was originally published by The Associated Press.

The article Allowances Don’t Teach Kids About Money — You Do originally appeared on NerdWallet.

Recent Posts

  • What are FedNow Payments?
  • How to Start Building Credit Early & Why it Matters
  • United Financial Expands Cryptocurrency to Offer Nine Digital Currencies and Launches a feature for Self-Directed Investing
  • The Earlier, The Better: How Your Early Investments Can Affect Your Financial Future
  • Your 2025 Financial Glow-Up: Resolutions Made Easy with United Financial Credit Union

Recent Comments

  1. United Financial CU Delivers Acts of Kindness to the Community – United Financial Credit Union on United Financial Credit Union Employees Spread Acts of Kindness in their Communities
  2. Celebrating Credit Unions during International Credit Union Month – United Financial Credit Union on 5 Reasons to Switch to United Financial
  3. Why College Students Are Choosing Credit Unions Over Banks – United Financial Credit Union on Off to College? Take United Financial With You!
  4. A Family United-Serving the Community with United Financial Credit Union – United Financial Credit Union on Live, Work, Play: How United Financial Supports Local Communities
  5. Understanding IRAs: Putting your cookies in the right cookie jar – United Financial Credit Union on Intro to Saving Series: Everything You Need to Know about Saving Money

ROUTING NUMBER

United Financial Credit Union Routing Number is 272477241

ABBREVIATIONS

*APR = Annual Percentage Rate **APY = Annual Percentage Yield

Connect With Us

  • Follow
  • Follow
  • Follow
  • Follow

Accessibility

If you are using a screen reader or other auxiliary aid and are having difficulty with this site, please call 800-772-8728 for assistance.

Home
Contact Us
Locations & Hours
Holiday Closings
Privacy Policy
Disclosures
Accessibility

Copyright. All rights reserved.

Exiting our website

You are now leaving the United Financial Credit Union Web site. The web site you have selected is an external one located on another server. United Financial Credit Union has no responsibility for any external web site. It neither endorses the information, content, presentation, or accuracy nor makes any warranty, express or implied, regarding any external site. Thank you for visiting United Financial Credit Union.

Continue
Stay